Dumb, Dumber and Sequester

Dumb, Dumber and Sequester

There’s a conventional account of the “sequester” which does have a large dose of truth, and goes roughly like this: from an economic policy standpoint, these cuts in the middle of a wobbly economic recovery are fantastically stupid. That’s because they were deliberately designed that way! Congress a year ago couldn’t agree on a “debt ceiling” plan, so they dreamed up a really, really stupid contingent budget-slashing arrangement — so stupid that they knew they wouldn’t be stupid enough to let the cuts actually happen. But they so stupidly underestimated their own stupidity that they couldn’t prevent them.

Right now, the overall impact isn’t so much like your computer crashing but more like a low-grade virus slowing it down. By some calculations, over the course of one year 700,000 jobs and a half percent of GDP growth might be lost. What you’ve heard in Canada, for example, is that border customs personnel will be reduced, for example, leading to longer delays for commercial traffic as well as tourists. (Tar sands oil in pipelines doesn’t have to wait for U.S. border clearance as far we know – that’s another issue.)

In the next few weeks, airport security delays will probably become noticeable for travelers. Conservatives and militarists are squirming over cuts affecting new weapons systems. Payments to doctors and hospitals for retiree medical services face reduction, but the major old-age programs of Social Security and Medicare are exempt from direct benefit cuts – although the big hits to those programs will be coming, under the guise of a “bipartisan debt-reduction bargain.”[1]

Underlying the comical stupidities of a Congress held hostage by the Tea Party and unable to come together on “revenue enhancement” (eliminating ridiculous tax breaks for corporations and the very wealthy) or much of anything else, there’s a strong dose of brutally calculated policy — in a word, austerity. The immediate pretext is an almost unique peculiarity in US law called the “debt ceiling,” dating back to World War I, which requires Congress to cap the total amount of government debt and to vote to raise the ceiling when necessary to enable borrowing to cover expenditures already mandated by Congress.

Due to ridiculously low levels of tax on large corporations and affluent individuals, and to the wars in Iraq and Afghanistan that George W Bush promised would be quick wins and didn’t have to be paid for, the US government has to borrow something like 42 cents of every dollar it spends. Last year, Tea Party Republicans threatened to block the normally routine debt ceiling increase, threatening to throw the government into technical default (although there are manipulations to avoid this which I won’t plunge into here. Also, the debt ceiling issue is not to be confused with the end-of-2012 “fiscal cliff” that was averted by ending the Bush tax cuts for the top two percent.)

The solution that the House of Representatives, the Senate and President Obama cobbled together was an agreement that in the absence of a long-term deficit reduction agreement, cuts would be imposed that everyone finds unpalatable — military cuts as the poison pill for the right wing, social program slashes to force liberals to bargain — but that’s where Congress miscalculated its own stupidity. After one futile extension those are the cuts now in effect.

In any case, the stupidity of the “sequester” can be considered as the subjective side of the crisis. Behind it is an objective side of the reality: the United States is in a budgetary and deficit bind, not in the short term, where it can borrow at practically zero interest, but over time because it is impossible to simultaneously sustain low taxes, social budget and the bloated imperial war budget — to say nothing of what’s need to repair our crumbling physical infrastructure or address the social catastrophe unfolding in our cities and schools.

The third aspect of the situation is the ideological offensive that’s made possible by the combined crises of stupid politics and objectively unsustainable fiscal reality: the demand that working people take lower living standards and greater insecurity. President Obama has openly stated that “entitlement spending,” meaning the Social Security and Medicare programs that Americans depend on in retirement, will be on the budgetary chopping block when the big deals are constructed.

To be sure, these programs are not about to be eliminated or privatized rapidly as right-wingers and Wall Street vultures would prefer. The first steps are more subtle: change the formula by which inflation-indexed Social Security increases are calculated, typically costing retirees some thousands of dollars over a couple of decades, and reduce medical benefits for the wealthy, a “progressive” sounding measure that begins to turn Medicare into a means-tested welfare program that’s easier to slash to ribbons down the road.

Also coming down the austerity pike, as proposed by the president’s appointed Bowles-Simpson commission and the heavily funded Peterson Institute for International Economics, is to raise the retirement age to 69. The wonks who float these “solutions” make good livings working at their computers and — if they’re healthy — can work till 69, while folks who work on assembly lines or in fields or high-stress low-wage retail and service jobs can hardly expect to manage that. And with employer-funded pensions vanishing and wages stagnant (even as the stock market reaches new highs and corporate profits soar), ordinary working families will be more dependent on the less-than-lavish provisions of Social Security.

Neither Democrats nor Republicans could contemplate direct Social Security cuts in the “sequester” — when it comes to political self-preservation, even Congressional idiocy has its limits. But the stupidity of the sequester, even though an immediate product of legislative dysfunction and gridlock, must also be understood as a softening-up operation for the full-scale assaults on the working class that are heading our way — and yours too.

David Finkel is a member of the US socialist group Solidarity and an editor of its magazine Against the Current